Energy Stocks Underperform. Here’s Why.

It’s the Nasdaq 100 and the 5 big cap tech and social media stocks that drive that index higher than the oil sector lately. That’s the first part of it. Wall Street money managers sell their underperforming energy stocks and, to keep up with highly competitive peers, buy NVIDIA
NVDA

DIA
and that mere handful of superhot names.

That’s the first reason that energy stocks can’t get going. The other major factor is the price of oil. It’s dropped 13% from September highs to the present and hasn’t given evidence that any kind of rally is imminent. Big and large cap oil equities tend to follow the price action of the underlying commodity and here we are.

The daily price chart of the benchmark for the sector, the Energy Select SPDR Fund, is here:

The fund has 23 holdings in the energy industry, all of them big caps with generally well-known names. After peaking at $92 in mid-September 2023, this ETF fell to as low as $79 in January 2023 before rallying back up to the $84 level. Note that it seems to be holding at just above both its 200-day and 50-day moving averages.

Exxon Mobil.

Market capitalized at $412 billion, the underperformance of the stock — compared to the Nasdaq-100 — is as clear as it gets. There’s a top price in late September 2023 of $119 and it never comes close again. Sellers took it to as low as $98 in mid-December 2023 and now it goes for $102, underneath both moving averages.

Chevron
CVX

The market cap is $286 billion. It hit $170 briefly in late September 2023 and slid all the way down to $140 by mid-January 2024. Since then, Chevron has rallied back to $152 but thus far is unable to regain the 200-day moving average for more than one session.

Conoco Philips

Another monster oil company, this one has a market cap of $132 billion. The high came in mid-October 2023 at $126 and the January 2023 price of $106 marks the low since then. Conoco Philips has a down trending 50-day moving average about to meet an up trending 200-day moving average.

EOG Resources.

It’s one of the smaller big caps in the sector with a market capitalization of a measly $65.81 billion. From $134 in mid-October 2023 to the current price of $112, the stock’s another underperformer for investors who could have held, for example, Amazon
AMZN
or Meta Platforms. Maybe these energy stocks will come back and outperform the tech and social media hotshots, who knows?

Charts courtesy of stockcharts.com. Stats courtesy of FinViz.com.

Additional commentary and analysis at johnnavin.substack.com.